Clarke v. Mindis Metals, Inc.

• Decision Date: 24 October 1996
• Docket Number: No. 95-5517,95-5517
• Citation: 1996 WL 616677,99 F.3d 1138
• Parties: NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Bruce CLARKE & Good Earth Recycling, Inc., Plaintiffs-Appellants, v. MINDIS METALS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1138

99 F.3d 1138

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.

Bruce CLARKE & Good Earth Recycling, Inc., Plaintiffs-Appellants, v. MINDIS METALS, INC., Defendant-Appellee.

No. 95-5517.

United States Court of Appeals, Sixth Circuit Oct. 24, 1996.

Before: KENNEDY and BOGGS, Circuit Judges; and RUSSELL, District Judge. ^*

BOGGS, Circuit Judge.

In this case of first impression raising questions about the 1993 amendments to Fed.R.Civ.P. 54(d), Bruce Clarke and Good Earth Recycling, Inc. ("Good Earth") appeal from the district court's order awarding fees and costs to Mindis Metals, Inc. under a contract. We affirm the district court's order in all respects.

I

On December 15, 1989, Bruce Clarke, a citizen of Tennessee, leased real property with fixtures in Sullivan County, Tennessee to Mindis Metals, Inc. ("Mindis"), a citizen of Georgia. Mindis planned to operate a recycling center at the site. ¹ The term of the lease was from January 1, 1990 to December 31, 1990. Rent was fixed in the amount of $4,000 per month. At the end of the term, the lease would be automatically extended, in the absence of written notice to the contrary, on a month-to-month basis at the rate of $5,000 per month. Both parties were empowered to terminate the hold-over term upon thirty days' written notice. Most significantly for purposes of this appeal, p 21 of the lease agreement provided:

21. Attorneys Fees: In case suit should be brought for recovery of the premises, or for any sum due hereunder, or because of any act which may arise out of the possession of the premises, by either party, the prevailing party shall be entitled to all costs incurred in connection with such action, including a reasonable attorney's fee.

Mindis took possession of the premises under the terms of the lease on January 1, 1990. Toward the end of the term of the lease, Mindis attempted to renegotiate the hold-over price term of the lease. Mindis wanted to reduce its monthly hold-over payments to $1,750. This attempt at renegotiation failed. Nevertheless, Mindis decided to continue in possession of the premises after the expiration of the lease. On January 4, 1991, Clarke notified Mindis that Mindis would be responsible for January rent and for damage allegedly done by Mindis to the building. On January 21, 1991, Mindis vacated the building, but did not remove all of its materials, having been locked out by Clarke, who posted a "no trespassing sign" on the premises.

On August 1, 1991, Clarke filed a complaint in the Circuit Court for Sullivan County, Tennessee, seeking rent from Mindis for the hold-over period in January 1991 and recompense for alleged damages done to its building, totaling $68,740. Mindis removed the case to federal court on August 26, 1991. Mindis filed an amended complaint for additional damages on September 27, 1991, which also demanded a jury trial and prayed for an award of attorney's fees. On February 24, 1992, Mindis amended its answer to counterclaim for damages pertaining to certain recycling materials left at the site and not returned to it by Clarke. Mindis requested $25,200 in compensatory damages and $50,000 in punitive damages on its counterclaim.

The district court held a pretrial conference on May 28, 1992 before a magistrate judge. The resulting order issued by the magistrate judge on June 1, 1992, determined that "the issue of attorney's fees, if any[,] to be awarded to the prevailing party, [will] be determined by the trial judge at some point subsequent to the entry of the verdict of the jury in this case." The parties to the dispute had requested that the matter of attorney's fees be dealt with in this fashion. On August 26, 1992, Mindis made a $16,000 settlement offer to Clarke that was rejected. ² Clarke argues that Mindis agreed to clean up the site during the course of the litigation, but Clarke provides no citation to the record to support this claim and we have been able to locate no supporting evidence for this proposition in the record. On October 5, 1992, a pretrial order was issued amending Mindis's counterclaim for damages to include the return of its $4,000 security deposit.

Mindis filed a motion for partial summary judgment on September 8, 1992, alleging that Clarke had improperly terminated the lease agreement as of December 31, 1990, and that Mindis was unlawfully ejected, so that its obligation for rent terminated on January 21, 1991. Mindis also requested that it only pay a pro rata share of rent up to January 21, 1991, based on a monthly rental rate of $4,000. On January 19, 1993, the district court granted Mindis's motion in part and denied it in part, finding that the applicable monthly rental rate under the lease was clearly $5,000. The district court ordered Mindis to pay a pro rata share of this amount for January 1-21, 1991. [Hereinafter "First Order."] The court also held that Clarke had breached the lease by locking out Mindis and for this reason chose not to order Mindis to pay Clarke a full month's hold-over rental fee of $5,000 for the month of January 1991.

Mindis then filed a motion for summary judgment on all remaining issues. The district court denied Mindis's motion for summary judgment on September 29, 1993, but held, in apparent contradiction of its First Order, that "there is a material dispute of fact in regard to which party breached the lease" and so "[t]his case will precede to trial on the issue of liability." [Hereinafter "Second Order."] Recall that in the First Order the district court held that both parties had breached the lease. What the district court likely meant, however, is that a material issue remained only as to whether Mindis further breached the lease by committing waste during the time it was in possession of the premises. In the Second Order, the district court went on to hold that there was a material factual dispute about what damages were incurred as a result of the alleged breach. In its Second Order, the district court also limited the kind of damages Clarke would be permitted to try to prove at trial. Finally, in the Second Order, the district court granted a motion unopposed by Mindis to add Good Earth as a plaintiff. ³ [Hereinafter Clarke and Good Earth are collectively referred to as "Clarke."]

A jury trial was held on these remaining issues from March 30, 1994 to April 4, 1994. At the trial, Clarke stipulated that Mindis's $4,000 security deposit would be returned to Mindis after being offset by any damages awarded to Clarke by the jury. The jury rendered its verdict on April 4, 1994. It found that Mindis had not breached the lease by causing damage in excess of normal "wear and tear" to Clarke's building or equipment. The jury rejected Mindis's counterclaims against Clarke in their entirety, however. The district court formally entered final judgment in the case on April 5, 1994. The same day, it ordered Clarke to return Mindis's $4,000 security deposit pursuant to the stipulation made at trial.

On May 4, 1994, 29 days after final judgment was entered, Mindis filed a motion for assessment of costs and attorneys' fees against Clarke in the amount of $110,080.38 for the entire period of the case from the time Clarke filed his complaint until the time the district court's April 5, 1995 order was entered, or $70,583.61 for the time period from Mindis's settlement offer until the district court's April 5 orders. Clarke responded to this motion arguing it was 15 days late, when judged against the 14-day time-limit set for certain attorney's fees motions in Fed.R.Civ.P. 54. By supplemental response, Clarke argued that Mindis was also not the prevailing party in the litigation. In both of these filings, Clarke asked for the opportunity to address the reasonableness of the fees requested should the district court decide to entertain Mindis's motion. The district court never held a hearing on the issue and granted Mindis's motion for fees and costs on March 29, 1995. It awarded Mindis $9,628.21 in costs and $60,955.60 in fees for a total award of $70,583.61. [Hereinafter "Third Order."] The amount the district court awarded Mindis equaled the total costs and fees Mindis had claimed for the time period from the offer of settlement until the district court formally entered final judgment. Clarke filed a timely notice of appeal from the district court's award of costs and fees. In its brief, Mindis claims that it called the district court's clerk and was told that it had 30 days to file its motion for fees and costs.

Clarke's appeal presents four issues for resolution: (1) whether the district court had jurisdiction to entertain Mindis's motion for attorney's fees after having already formally entered final judgment; (2) whether the 14-day time limit in Fed.R.App. 54(d)(2)(B) applies to cases where attorney's fees are not provided for by rule or statute, and if so, whether Mindis's motion for attorney's fees was untimely; (3) whether Mindis was a "prevailing party" within the meaning of Fed.R.Civ.P. 54(d)(1) and/or Mindis's lease with Clarke; and (4) whether Mindis is entitled to the approximately $9,000 in costs awarded to it by the district court. Neither party has raised the jurisdictional issue this case presents, but it is axiomatic that we must raise issues of subject matter jurisdiction sua sponte. Community First Bank v. Nat'l Credit Union Admin., 41 F.3d 1050, 1053 (6th Cir.1994).

II

With the exception of Clarke's final assignment of error, relating to costs, the standard of review to be applied in this case is de novo. Clarke's arguments are largely about how the Federal Rules of Civil Procedure should be construed. Clarke is not arguing that the district court improperly exercised its discretion in deciding to award fees; rather, ...